Tag Archives: greater phoenix

KrispyKreme

SRS Real Estate Partners Sells Building at The Park in Chandler to Krispy Kreme

SRS Real Estate Partners announced the sale of a 53,492-square-foot shopping center outparcel which includes a 3,504-square-foot former bank building located at the southwest corner of Chandler Boulevard and Alma School Road in Chandler, Ariz.

Alan Houston and Jeff Alba with SRS Real Estate Partners represented the seller, Grossman/Robson Associates in the transaction.  Andy Kroot with Velocity Retail represented the buyer, Hot Glazed Enchantment, Inc.

Kroot announced Krispy Kreme Doughnuts purchased the former Washington Mutual Bank building at the southwest corner of Chandler Boulevard and Alma School Road in Chandler. The transaction closed escrow on August 26, 2013 with Andy Kroot of Velocity Retail Group, LLC representing the buyer – Hot Glazed Enchantment, Inc., a New Mexico corporation and SRS Real Estate Partners representing the seller – Grossman/Robson Associates. The building was +/-3,504 SF on 1.23 acres of land and sold for $837,500.

“We are pleased to be able to help Krispy Kreme expand their presence and product offering in the greater Phoenix area,” said Kroot, “and we are continuing to look for sites (for sale or for lease) in the 1,500 to 3,500 square-feet range on freestanding locations or end caps with drive-thru.”

At the moment, Krispy Kreme has four stores open in the greater Phoenix area; the Mesa factory at Superstition Springs Boulevard/US 60 Freeway, 7055 E. Shea Blvd., Scottsdale AZ, 1984 W. Main St., Mesa, and 3201 W. Indian School Rd., Phoenix, with other stores in the works. Krispy Kreme was founded in 1937 in Winston-Salem, NC, and is well known for its signature hot Original Glazed® doughnut. There are 649 Krispy Kreme locations in 21 countries around the world.

GPEC Forum

GPEC targets international business executives

The Greater Phoenix Economic Council (GPEC) this week officially launched an international toolkit and forum series, called “Doing Business in Greater Phoenix, U.S.A,” with additional support from the City of Phoenix. The toolkit is designed to assist foreign companies with investment and expansion decisions in the United States and, specifically, the Greater Phoenix region.

From accessing capital to forming strategic partnerships with universities and purchasing land in Arizona – the toolkit is a compilation of how-to advice ranging from human resources issues, immigration law, investment parameters, taxes, import/export laws and banking.

“Phoenix is open for business,” Phoenix Mayor Greg Stanton said. “In order for our economy to be globally competitive, we have to reach out internationally so we can attract the businesses and jobs that will propel Phoenix toward a stronger future. Making our city a place where it’s easier to do business makes it even more attractive to investment. It’s a win-win.”

The toolkit was officially launched last month in Shanghai, where GPEC joined representatives from Green Card Fund, Polsinelli and BDO for the first forum, held in conjunction with the International Photovoltaic Power Generation Conference and Exhibition (SNEC).

“The response we received to our forum was incredible, with 75 attendees at the forum and nearly 1,000 online views to date – and we are just now starting to actively promote it,” GPEC President and CEO Barry Broome said. “In China, executives are hungry for this type of information so they can grow their businesses abroad. Fortunately for them, Greater Phoenix is primed for growth and is very hospitable in helping companies that are considering foreign-direct investments with their options in the City of Phoenix and the surrounding region.”

Arizona has taken giant strides over the past few years to keep business taxes low and improve available economic development programs. The City of Phoenix has a 24-hour business permitting program that allows businesses to apply for a permit and start construction on the same day.

“The response from businesspeople and government officials in China to the toolkit we presented was excellent. Helping executives understand the benefits that GPEC has to offer companies is a key component to positioning our region for future business opportunities,” said Melissa Ho, a shareholder of the national law firm Polsinelli. “Our international law team is excited to partner with GPEC and the City of Phoenix as we explore the possibilities in China.”

Since last month’s launch in Shanghai, the toolkit’s website has received nearly 1,000 hits without any additional promotion beyond the first forum. As such, the region’s international brand – of which the City of Phoenix is a central part – is receiving a significant boost from the toolkit. The media impact from the initial rollout in Shanghai was also substantial, with media impressions of 370 million from last month’s trip alone.

“By taking the initiative and launching the International Toolkit, GPEC, along with local business leaders and the City of Phoenix, have shown their steadfast commitment to providing foreign firms and individuals with the knowledge and resources needed to successfully invest and expand to the Greater Phoenix region,” said Kyle Walker, Managing Partner at Green Card Fund, which specializes in EB-5 visas and presented at the forum in Shanghai.

“I couldn’t be more excited about GPEC’s creativity in developing ways to attract new businesses to Arizona and am proud to contribute the strength of the BDO network to those efforts,” said Susan Wolak, Office Business Line Leader at BDO USA, which has 37 offices and 4,700 employees in China, and also assisted in the recent trip to Shanghai.

The toolkit is currently available in English, Mandarin and Spanish, and plans are underway for further translations. Both short and long versions of the toolkit are available at http://www.gpec.org/toolkit.

rsz_davecheatham_velocityretail_small_2013

Retail Overview: Big Boxes, Big Decisions

 

As a building owner of a vacant big box (or perhaps soon-to-be-vacant), there are a lot of factors that affect the return on your investment and the success of your asset.

From our experience in working with owners as they analyze their asset, we have found that one common denominator applies to every situation — the owner must be armed with specific market information so that they can make educated decisions.

Market intelligence or market analytics play a key role in nearly every building sale or lease. While it is important to know the vacancy rate in the market, it is even more important to drill down to specifics about your product type and market area.

Following are some questions you can ask yourself about your building or asset:

>> How many vacant big boxes are in the immediate trade area (what is my competition)?

>> Are the big boxes of the same product type? Neighborhood, vs. power center, vs. anchored, vs. unanchored?

>>  What is the average length of time these boxes are on the market before they lease or sell?

>> What deals have been completed recently which are similar? What was the rental rate, or concessions such as free rent or TI dollars?

>> Who would be the typical tenants to lease or buy the space? Are they already in the area?

>> Will the other tenants in my shopping center be able to stay open if the anchor space is vacant? If so, for how long?

Chances are you do not know all of these answers, or even know where you can get this information. However, we believe that these answers are critical to a successful outcome for your asset. Whether you want to lease and hold it as an investment, or whether you want to sell it as is, the information you gather to make that decision is critical.

Velocity Retail Group has allocated significant resources over the past two years to create a structured research vehicle aimed specifically at big box owners. We have drilled down to specific product types within cities, market areas and regional areas. Additionally, understanding absorption, vacancy and new construction are critical factors to any real estate decision.

Over the past year, we have been asked to present our information to various economic, industry and governmental groups throughout the Valley. The feedback we receive from these presentations has been extremely positive. In order to help share this information in a format that communicates the analytics succinctly we have created a video podcast series for our clients.

Click on the video at the bottom of this article to watch the eight-minute market overview recapping 2012.

Dave Cheatham is Managing Principal of Velocity Retail Group. He is an authority on retail real estate in the disciplines of brokerage, project leasing, development, consulting and advisory services. He is a senior advisor to merchants, entrepreneurs, investors and senior retail executives throughout the industry.

Bill Pepicello, chairman of GPEC and president of University of Phoenix - AZ Business Magazine Jan/Feb 2011

Q&A Bill Pepicello, GPEC Chairman And University Of Phoenix President

What are your top goals as chairman of GPEC?
First, and foremost, my goal is to build on the momentum that Michael Bidwill, GPEC’s immediate past chairman, and Barry Broome, GPEC’s president and CEO, have driving the region toward new high-quality jobs. … I also want to expand on their vision and ideas to build a healthy economy. Many of the pieces of the puzzle are coming together now. Arizona’s Renewable Energy Tax Incentive Program is driving hundreds of new jobs and millions in capital investment. In addition, many leaders are focused on moving Arizona’s economy beyond its former reliance on the construction, retail and real estate industries.

How would you characterize Greater Phoenix to companies looking to expand here?
Greater Phoenix is a strong investment decision for companies. We have ground-floor business opportunities for companies looking for the right place to expand their businesses. Renewable energy companies and bioscience companies do very well here. The semiconductor and aerospace industry are intertwined in Arizona’s history. Also, Greater Phoenix is an ideal location to launch a business and export products to California, which has a more expensive business environment. … We have highly skilled labor, an affordable operating environment and new available buildings.

Why is GPEC targeting the renewable energy industry?
The industry provides high-quality jobs for local communities, injects millions in capital investment, and draws other companies that serve as suppliers. … GPEC will continue to focus on renewable energy policy and the state’s aggressive Renewable Energy Standard that appeals to companies. Michael will continue to play a pivotal role in advancing the renewable energy industry, as Gov. Brewer has appointed him to lead the Arizona Commerce Authority’s Renewable Energy Growth Sector Committee.

What is GPEC doing this year to advance the region?
We are partnering with the Legislature to bring more high-quality jobs to Arizona, and we are working with lawmakers to modernize the state’s Enterprise Zone to draw more companies here. We are continuing with rebranding efforts to move Arizona’s national image beyond the immigration debates. I believe our efforts to continue diversifying the region’s economy will have a lasting impact for the region and Arizona. GPEC is working very hard to strengthen the economy. We have many tasks to accomplish this year but we are definitely up for the challenge.

AZ Business Magazine Jan/Feb 2011

Roy Vallee, Chairman & CEO of Avnet - AZ Business Magazine Jan/Feb 2011

CEO Series: Roy Vallee

Long-time member talks technology, dealing with global economic problems, adapting to the changing world of technology, and more.

Roy Vallee
Title: Chairman and CEO
Company: Avnet

How you would you assess the current state of your industry?
Things are going pretty well for technology. Calendar 2010 will be a very good year by historical standards for our electronics business and our IT business. And in 2011, I would say things are going to normalize and grow at the secular growth rate for the industries. For us that’s good news because secular growth is kind of 1-1/2 to 2 times overall economic growth, so things are pretty good in technology.

You had a great first quarter. What do you think that portends for the economy in 2011?
Well, I’m not 100 percent sure, of course, but I think a couple of things are clear. Technology is leading this recovery. We’re growing a lot faster than the overall economy, certainly certain segments of the economy. So, I’m very pleased about that. And I think it also does indicate that we are at least in the early stages of a macro-economic recovery, even if it’s a gradual one … and hopefully that cyclical recovery will continue through 2011 and beyond.

Could this improvement possibly be a blip?
I think from an IT spending perspective that the possibility of it being a blip is there, but let’s maybe define blip. … Corporate psychology is such that it’s ready to invest in IT projects after it’s done swapping out the old hardware. I would also like to point out, though, that a significant part of our business is electronic components and a portion of those find their way into a variety of consumer goods, and that part of our business is quite strong, as well. So it’s not just corporate spending that’s driving our growth.

How is Avnet dealing with the various Global economic problems?
We deal in a variety of markets. Some of them are actually quite exciting right now; obviously places like China, India, Brazil, other parts of Asia Pacific, parts of Eastern Europe. There are parts of our business growing very rapidly these days. So the way we deal with that is we gear up and try to support the market that is there. In the areas where the developed countries have been hard-hit by the economic downturn and credit crunch, we simply dial the resources down. … we basically size our business to the amount of opportunity that exists on a local level.

In December, Avnet celebrated 50 years on the New York Stock Exchange. What do you think that says about your company?
It says a lot of things. First and foremost, adaptability: there have been a lot of economic cycles, there’s been changes in technology, there’s been changes in our industry structure at the fundamental value proposition of distributors like Avnet; there’s been globalization. So, the company being (on the NYSE) 50 years says we’re highly adaptable as an organization. … I think another thing it speaks to … is what I would call financial conservatism or fiscal discipline. And I think the third thing … is the culture. We’ve got a culture that is very grounded in our core values.

    Vital Stats



  • Joined Avnet in 1977
  • Appointed president of Hamilton/Avnet Computer in 1989
  • Elected to Avnet’s board of directors in 1991
  • In July 1998, he was elected chairman of the board and chief executive officer
  • Named to the Twelfth District Economic Advisory Council for the Federal Reserve Bank of San Francisco in 2010
  • Member of the Arizona Commerce Authority board of directors
  • Member of the boards of directors for Teradyne and Synopsys
  • Inductee of the CRN Industry Hall of Fame
  • Participates in Greater Phoenix Leadership

Arizona Business Magazine Jan/Feb 2011

Economic forecast

Economic Forecast Calls For Another Year Of Slow Recovery In 2011

Arizona’s economic recovery will continue to move at a glacial speed in 2011 — but at least it’s moving. The coming new year will see an increase in job creation, a rise in population and even a modest increase in single-family home permits. However, the consensus among economists at today’s 47th Annual Economic Forecast Luncheon, co-sponsored by the Department of Economics at Arizona State University’s W. P. Carey School of Business and JPMorgan Chase, is that Arizona’s recovery will continue to be far less robust than economic rebounds of the past.

“Arizona was much harder hit in this recession than the rest of the country,” said Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W.P. Carey School of Business in an interview before the luncheon. “Overall the U.S. lost about 6 percent of jobs, while Arizona lost 11 percent of jobs and the Greater Phoenix area lost 12 percent of jobs. So, by that measure, Arizona’s problems were twice as large as the average state.”

According to McPheters, hampering Arizona’s growth in 2010 has been:

  • Consumers’ focusing on paying off debt rather than spending
  • Corporate profits improving but hiring deferred
  • The expected resurgence in single-family housing did not develop
  • Home prices have not yet stabilized
  • Small businesses facing tight credit conditions and weak demand
  • Stimulus programs ending


Job Growth

In terms of job creation, Arizona employment is expected to increase by 47,800 jobs in 2011, following three straight years of losses. The projected rate of growth for 2011 is 2 percent. That’s about double the rate of employment growth anticipated for the nation as a whole, but well below the state’s long-term average of 3.7 percent.

In addition, the state’s unemployment rate will remain above the 9 percent mark throughout 2011.

Still, even with Arizona being at ground zero of the burst housing bubble that dragged the rest of the nation into recession, the employment situation in the state has shown a marked improvement.

“For all of 2009, at the deepest point of the recession, only Nevada had weaker labor market conditions, and Arizona ranked 49th among the states in job growth (or losses),” McPheters said. “But in just the past couple of months, Arizona’s overall position is improving. The state ranked 12th based on October job creation in the 50 states. And in September, Phoenix added 27,400 jobs compared to the year before. Phoenix is the now the second-fastest growing metro area.”

Real Estate

The real estate and housing markets in Arizona remain weak in 2010, with single-family housing permits expected to be down 5 percent, marking a fifth consecutive year of declines. Single-family housing permits are expected to finally improve next year, with an anticipated increase of 25 percent. However, that increase stems from a base of 12,000 units in 2010, totaling just an additional 3,000 units. Compare that paltry number to the 80,000 annual permits handed out at the peak of the housing boom.

“Last year at this time, there was optimism about Arizona housing, but the growth never came,” McPheters said. “It looks like 2010 single-family building won’t even reach the level of 2009, which was the worst year of the recession. So most analysts are cautious right now about housing.”

One of those cautious analysts is Elliott Pollack, CEO of Elliott D. Pollack & Company in Scottsdale.

“The good news is that the worst is over, but it’s going to be a painfully slow recovery,” Pollack said in an interview before the forecast luncheon.

Pollack lists the following as reasons why the state’s housing market is showing only the slightest signs of improvement:

  • Tougher underwriting standards on mortgages
  • Up to 51 percent of the homes in Arizona have negative equity
  • Previous loan modifications have mostly failed
  • Foreclosures remain high
  • Option ARM resets do not peak until next year


Athena Awards

ATHENA Award Winners Announced

Susan Cordts, Sharon Knutson-Felix and Rachel Bennett Yanof were recipients of 2010 ATHENA Businesswoman of the Year Awards presented today at the Arizona Biltmore Resort & Spa,

Cordts, President & CEO of Adaptive Technologies Inc., was 2010 ATHENA Businesswoman of the Year in the Private Sector; Knutson-Felix, Executive Director – 100 Club of Arizona, was 2010 ATHENA Businesswoman of the Year award in the Public Sector; and Bennett Yanof, Executive Director – Phoenix Collegiate Academy, won the 2010 ATHENA Young Professional Award.

The event marks the 23rd year the Greater Phoenix Chamber of Commerce has honored Valley businesswomen with the ATHENA Award, named after the Greek goddess of courage and wisdom, and a program of ATHENA International, a foundation dedicated to creating leadership opportunities for women.

Cordts, Knutson-Felix and Bennett Yanof were chosen from among 11 other ATHENA finalists who were selected from a large group of nominations received in August.

Civic Space Park - AZ Business Magazine Sept/Oct 2010

Local CVBs Sound Off On Boycotts And Why Arizona Is Still A Top Meeting And Travel Destination

It’s no secret that the meetings industry, and travel in general, has taken quite a few hits in Arizona over the past few years. As a result, local convention and visitors bureaus — the ones who promote travel to and meetings in the state — have had to overcome new obstacles in their quest to make the Valley a top destination spot.

Steve Moore, president and CEO of the Greater Phoenix Convention and Visitors Bureau (GPCVB), notes that while room night consumption was up nearly 11 percent from January through May (versus those same months last year), future business-lead production since this past May has dropped to 40 percent below the year-over-year pace.

“And remember,” he adds, “we were in a severe recession and also a key target of the (corporate meetings backlash) last year.”

While the corporate meetings backlash has abated, the state’s tourism industry was hit again this spring when the state Legislature passed, and Gov. Jan Brewer signed, the nation’s toughest immigration law, SB 1070. The media firestorm that ensued caused cities, companies and individuals to boycott doing business in and traveling to Arizona.

Stephanie Nowack, president and CEO of the Tempe Tourism Office, is aware of just two groups that decided not to meet in Tempe due to the immigration law. However, the combined economic impact of those cancellations was a loss of $385,000 to the city.

Pam Williams, CTA, convention sales manager for the Mesa Convention and Visitors Bureau, notes that the immigration law may be having a greater negative impact than can be seen on the surface.

“We have had a few groups express their concerns about this bill, and some organizations have specified that their group will not be considering Arizona as a destination in the near future for their conferences and meetings due to SB 1070,” Williams says. “However, industrywide, it’s the meetings we don’t know about that have silently chosen to exclude Arizona on their RFPs and short lists that will have the greatest impact. This will make calculating the monetary effects to our industry next to impossible.”

But, believe it or not, there is some good news to report on the tourism front. According to Rachel Sacco, president and CEO of the Scottsdale Convention and Visitors Bureau, “Scottsdale’s January through April 2010 occupancy and revenue per available room (is) ahead of last year … This past year, 50 percent of our meetings leads were for new business.”

In addition, a Metropoll XIII study, conducted by the market research firm Gerald Murphy and Associates, recently found that “meeting planners rank Scottsdale first for its romantic atmosphere, friendly residents, green policies, outdoor recreation, and great shopping and restaurants.”

The positive outlook is not contained in Scottsdale, but is being felt all over the metro area.

Moore notes that “the GPCVB typically books between 600,000 to 700,000 hotel room nights per year, and last fall we doubled our meeting planner fly-ins, targeting those groups with a peak block of 200 rooms. Most were over 1,500 rooms on peak, and we were very successful in showcasing the ‘New Phoenix,’ as too many planners had not been to our destination in many years.”

Over in Tempe, voters recently approved Prop. 400, which increased the bed tax by 2 percent.

“It is our job to promote the area and drive traffic to Arizona,” Nowack says. “With this additional funding, we’ll be able to put into place a strategic initiative to market the area in a consistent and positive way.”

Nowack also is proud to announce a new event in the Tempe/Scottsdale area, the Women’s Half Marathon. It will begin in Scottsdale and end at Tempe Beach Park, and is expected to draw 5,000 participants on Nov. 7. Nowack says the event is “a perfect example of new business still looking to Arizona.”

“They chose us because of our knowledge, experience, and success hosting events,” she adds. “We are known for hospitality.”

It is this local hospitality that Nowack would like to remind meeting planners of when it comes time to schedule their travel and events.

“(The immigration law) has given us a challenge to rebuild Arizona’s brand,” she says.

But Moore says this may be easier said than done.

“Because our hard-earned brand has somewhat been hijacked, this effort will take longer than many suspect,” he says. “Substantial marketing resources from both the public and private sectors must be enhanced and maintained. Tourism/meetings (have) been impacted far more than any other sector in the state, and our industry needs to create a compelling reason for the state’s business leadership to better appreciate how visitors and conventions impact them.”

Arizona Business Magazine Sept/Oct 2010

E012850

Greater Phoenix Economic Forecast 2011: “Painfully Slow”

The economy may be better in 2011 than it was in 2010, but the road to full recovery will remain long and full of potholes. But hey, it could be worse. It could be 2009.

That’s according to economist Elliott D. Pollack, CEO of Elliot D. Pollack & Company. Pollack was speaking at the Greater Phoenix Chamber of Commerce’s Economic Outlook 2011 breakfast today at the Arizona Biltmore Resort & Spa.

Pollack said population growth in the Valley should settle at 1 percent this year and rise to 2 percent in 2011. Net job growth will contract by 1 percent in 2010 and climb by 2 percent in 2011. Retail sales will increase 1 percent this year and rise by 8 percent next year. Building permits will increase by 20 percent in 2010 before jumping 50 percent in 2011.

In summarizing his 2011 forecast for the Valley, Pollack read a laundry list of good news and bad news:

  • The housing market is at or past bottom, but there are many negatives still trumping a full recovery, most notably slower migration flows.
  • The commercial real estate market is at or past bottom, but recovery will be slow and “take a long time.”
  • Sales tax revenues are no longer falling, but they aren’t growing quickly enough to fix the state’s battered budget.
  • Retail sales have past bottom and there is pent-up demand among consumers, however, those same consumers are still so worried about personal debt that they will continue to curb spending, thus thwarting a big recovery.

While Pollack said the Valley’s economic recovery will be “painfully slow,” he points out that a recovery is indeed underway. For example, the state’s standing in employment growth compared to the rest of the nation is gradually improving — but only after a precipitous decline. In 2006, Arizona ranked second in the nation in job growth; that dropped to 22nd in 2007; 47th in 2008; and 49th in 2009. Up to July of this year, the state had moved up to 42nd in job growth.

Another indication that the Valley’s economy is showing improvement is in the number of economic sectors that have shown net job gains. Of the state’s 12 major economic sectors, five have shown net job gains so far this year (education and health services; trade; leisure and hospitality; professional and business services; other services). That compares to the same time last year, when no economic sectors reported net job gains.

But, Pollack pointed out again, the Valley and state can’t expect the robust and recoveries that have accompanied past recessions.

He says the Valley’s housing market continues to be weighed down by:

  • Weak job growth
  • Tough underwriting standards
  • Negative home equity
  • Loan modification failures
  • High foreclosures
  • Option ARMs (adjustable rate mortgages) peaking in 2011

In terms of equity, 51 percent of houses in the state have negative equity. The national average is 23 percent. Such negative equity severely curtails people’s ability to buy and sell homes. In addition, supply still outstrips demand in the single-family home market, with an excess inventory of houses somewhere between 40,000 to 50,000 units, Pollack said. A balance between supply and demand will not be fully achieved until about 2014, he added.

The picture is bleaker for the commercial real estate market, with delinquencies on loans still very high. In the office market, Pollack cited forecasts from CB Richard Ellis that said vacancy rates would peak at 25.6 percent in 2010 before dropping to 23.9 percent in 2011. As Pollack pointed out, there currently is no multi-tenant office space under construction in the Valley. In fact, he expects “no significant office building in Greater Phoenix for the next five years.”

Industrial space vacancy rates are faring only slightly better, with CB Richard Ellis predicting year-end vacancy rates of 16.4 percent for 2010 before falling to 15.2 percent in 2011. As for the retail market, the vacancy rate will rise to 12.3 percent in 2010 and hit 12.9 percent in 2011.

For office, industrial and retail commercial real estate, Pollack said he did not expect vacancy rates to reach normal levels until 2014-2015.

Still, Pollack maintained that the economic outlook for the Valley “remains favorable,” thanks to the recovering national economy, increased affordable housing in the Valley, a rise in single-family home building permits, unemployment bottoming out, consumer spending improving and continued problems in California.

State’s Tough, New Immigration Law - AZ Business Magazine June 2010

Business Leaders are Concerned About the Repercussions the State’s Tough, New Immigration Law Will Have on Arizona’s Still Struggling Economy

Opponents of Arizona’s toughest-in-the-nation immigration law charge that it is unconstitutional and will lead to racial profiling, specifically targeting Hispanics. Supporters counter that the state statute corresponds with federal law and is designed to deal with those who break the law by entering the country illegally. Caught in the crossfire is Arizona’s fragile economy.

Regardless of where one falls on the SB 1070 debate, there is no doubt that it is having negative repercussions on the state’s economy. How severe those repercussions will be is unknown, and Valley and state business leaders are working hard to head off any further damage.

“It’s a negative and it’s not helping us,” said Barry Broome, president and CEO of the Greater Phoenix Economic Council.

The Phoenix City Council was told the city alone could lose up to $90 million in hotel and Phoenix Convention Center business over the next five years. At press time, city officials were monitoring at least 19 upcoming events, including some that already had pulled the plug on Phoenix, said Deputy City Manager Dave Kreitor.

Last month, Los Angeles became the largest city in the nation to prohibit its local government from doing business in Arizona unless the immigration law is repealed. There are estimates that the L.A. boycott could affect up to $8 million worth of contracts with Arizona. About two-dozen groups already have pulled events from Arizona, which tourism officials say has cost the tourism industry millions of dollars.

SB 1070
On April 23, Gov. Jan Brewer signed Senate Bill 1070 into law, making it a crime under state statute to be in the country illegally. Wording in the original law directed local police to question people they had made “lawful contact” with about their immigration status if there was reason to suspect they were illegal. Amendments to the law days after Brewer signed it included changing “lawful contact” to “lawful stop, detention or arrest”; and adding that officers cannot base their reasonable suspicion on race, color or national origin. The law goes into effect on July 29.

Although boycotts already have begun impacting the state’s tourism industry, Brewer said she has no intention of backing down. The state had to act, she said, because the federal government failed to secure the border with Mexico.

In a statement titled “Misguided Boycott,” Brewer said that when she signed the legislation, “I stated clearly I will not tolerate racial discrimination or racial profiling in Arizona.”

In response to a question about what Brewer can and will do to turn around the spread of boycotts and meeting cancellations, the Governor’s Office released this statement: “Governor Brewer will continue to aggressively oppose economic boycotts as a thoughtless effort that harms innocent families and businesses. Both proponents and adversaries of SB 1070 in Arizona have come out in staunch opposition to an economic boycott, including most recently Congresswoman (Ann) Kirkpatrick and the Tucson Hispanic Chamber of Commerce.”

Brewer went a step further in May when she announced the formation of a task force charged with rebranding the state as a tourist destination. Brewer said it was time to “get the truth out there” about the law.

Meanwhile, polls taken before and after the law’s passage show Arizonans’ support of the statute is fluctuating. A Rasmussen poll taken a week before the law was signed showed 70 percent of residents supported the measure. A survey taken a week after the law was signed showed support dropping to 52 percent. National polls have consistently shown strong support for the law.

“When you think of Arizona now, you think of this immigration law.  That’s not the first thing you want people to think of.” – Barry Boome, Greater Phoenix Economic Council

Threat to tourism
Debbie Johnson, president and CEO of the Arizona Hotel & Lodging Association, released a statement saying the tourism industry is “deeply concerned about the repercussions that will result from the debate around Senate Bill 1070.”

The statement from Johnson, who also leads the Valley Hotel & Resort Association and the Arizona Tourism Alliance, continued: “Arizona tourism is currently in a very fragile state of recovery and the negative perceptions surrounding this legislation are tarnishing Arizona’s image and could easily have a devastating effect on visitation to our state.”

Any loss of business negatively impacts the tourism industry and “directly affects the paychecks and health benefits of our most vulnerable tourism employees as well as their families,” Johnson added. She also stated that the tourism industry provides 200,000 jobs and $1.4 billion in tax revenues to state, city and county budgets.

Kristen Jarnagin, communications director for the Arizona Hotel & Lodging Association, said that as of the first week of May, 23 groups had cancelled meetings in Arizona, resulting in a loss of up to $10 million.

One group that pulled out is the American Immigration Lawyers Association, which canceled a fall conference in Scottsdale. Another is the African-American Alpha Phi Alpha Fraternity Inc., which was supposed to hold its convention in Downtown Phoenix in July, bringing an estimated 5,000 attendees and as many as 10,000 visitors. Instead, it’s going to Las Vegas.

Corporate impact
Some Arizona companies also are feeling the sting generated by the controversy. Some opponents of the law are urging people not to fly Tempe-based US Airways or to rent trucks from Phoenix-based U-Haul.

Even the state’s professional sports teams have been affected. Pickets urging a boycott of Arizona took place outside of Wrigley Field in Chicago when the Arizona Diamondbacks were playing the Cubs there. In addition, Sen. Charles Schumer (D-NY), has called on Major League Baseball to pull the scheduled 2011 All-Star game out of Phoenix.

Derrick Hall, president and CEO of the Diamondbacks, said he was concerned, but noted that planning for the game has advanced to the point where “it would be difficult to back off … for 2011.” MLB Commissioner Bud Selig has been ignoring the boycott calls.

Phoenix Suns Managing Partner Robert Sarver stepped into the middle of the debate in May, by announcing that the team would wear its “Los Suns” jerseys in recognition of playing on Cinco de Mayo. Then he added that “frustration with the federal government’s failure to deal with the issue of illegal immigration resulted in passage of a flawed state law.”

But has the federal government’s failure to secure the border with Mexico cost Arizona business? Some of the state’s top economic development experts say no. Shortly after the law was signed, Broome of GPEC said he had never heard of any businesses that were considering relocating to Arizona expressing concerns about the state’s porous border with Mexico.

“In our discussions with companies looking to move to Arizona, we want to begin and end with good things — the emergence of (Arizona State University), quality of life and a talented work force,” Broome said. “The biggest hardship is on the brand. When you think of Arizona now, you think of this immigration law. That’s not the first thing you want people to think of.”

David Drennon, director of communications for the Arizona Department of Commerce, agreed with Broome that the flow of illegals across the border has been a non-factor in business relocation decisions.

“Actually, the proximity to Mexico is advantageous, giving businesses access to markets in Mexico and even South America,” Drennon said
As Arizona’s No. 1 trading partner, Mexico imported $4.5 billion worth of Arizona products such as semiconductor chips, machinery and plastics in 2009, according to the Arizona Department of Commerce.

What needs to happen next, Broome said, is for business and government leaders to clearly communicate the law’s intention.

“This law was signed without a clear understanding of how we are going to get involved in a communications strategy,” he said. “People need to understand that this is a law that mirrors federal law. That’s been lost.”

While the experts say the illegal flow of immigrants into Arizona has not chased away relocating companies, the storm over the new law is causing some out-of-state corporate anxiety.

Laura Shaw, senior vice president of marketing and communications at Tucson Regional Economic Opportunities (TREO), noted that officials with two major relocation prospects for the Tucson area say they are concerned about the uproar the immigration law has sparked.

“But they haven’t said no,” Shaw quickly added. The two prospects are in aerospace and bioscience, and would provide hundreds of jobs.

“Businesses looking to relocate or expand don’t like controversy,” she said.

Politicians, pundits and stars
It was precisely controversy that attracted high-profile celebrities to Arizona, including civil rights leader the Rev. Al Sharpton, actor Danny Glover and Colombian singer Shakira. And, in protest, comedian George Lopez canceled an appearance at an Indian casino just south of Phoenix.

As the Arizona bill was making its way through the capitol, the state’s two U.S. senators, John McCain and Jon Kyl, announced a 10-point border security plan. Among other things, it calls for deploying 3,000 National Guard troops along the Arizona-Mexico border and permanently adding 3,000 more Custom and Border Protection agents in the state.

McCain, who came out in support of the immigration law, said the current wave of protests and what happened after Arizona voters rejected a paid Martin Luther King Jr. holiday in 1990 are completely different.

“One was about honoring a civil rights hero who a majority of Americans held in extremely high esteem,” he said. “The other is about an issue of national security and the security of our citizens, where we have broken borders and are literally overwhelmed with both human smuggling and drugs.”
After the King vote, which was reversed in another election two years later, the NFL pulled the 1993 Super Bowl from Arizona. Estimates of lost convention business in the Phoenix area alone topped $190 million.

J.D. Hayworth, a former U.S. congressman and McCain’s opponent in this year’s hotly contested GOP primary, had urged Brewer to sign the law. In 2005, while still in Congress, Hayworth introduced the Enforcement First Act, which focused on border security. The bill did not pass. Hayworth’s press secretary, Mark Sanders, said the former congressman is continuing his efforts to seal the border.

“That’s where we start,” Sanders said. “And no amnesty. No reward for illegal behavior.”

U.S. Rep. Raul Grijalva, a Democrat who represents Southern Arizona’s 7th Congressional District, created an uproar of his own when he called for a boycott of a large chunk of the state’s tourism industry.

In a statement made a few days after the law was passed, Grijalva said, “This is a specifically targeted call for action, not a blanket rejection of the state economy … we are calling on businesses and organizations not to bring their conventions to Arizona until it recognizes civil rights and the meaning of due process. We don’t want to sustain this effort any longer than necessary. It’s about sending a message.”

Boycotting boycotts
James E. Garcia, director of communications for the Arizona Hispanic Chamber of Commerce, said his organization does not support the boycotts, but it is concerned about civil rights issues.

“We believe passage of this bill sends a message to the country and world that Arizona is somehow under siege by immigrants,” Garcia said. “That kind of message tells people: don’t start a business in Arizona and don’t be a tourist here.”

David Roderique of the Downtown Phoenix Partnership said the organization had arranged to have several individuals ask Brewer to veto the bill, fearing an economic backlash. After the law was signed, partnership representatives were involved in pitching Phoenix to the Democratic National Committee as the host city for the 2012 Democratic National Convention.

“The likelihood of the Democrats coming here now is zero,” Roderique said. “We have a definite concern that this will create a significant economic impact when we can least afford to have another major disruption.”

In May, the Republican National Committee bypassed Phoenix as the host of the 2012 Republican National Convention. AZGOP Chairman Randy Pullen immediately issued a statement saying that many would cite the new immigration law “as one of the reasons that Phoenix was not chosen (and) nothing could be further from the truth. Members of the RNC overwhelmingly support the immigration bill signed … and Republicans from coast-to-coast stand with Arizonans as we fight to secure our border.”

To that end, Roderique noted that if several other states pass similar laws, some of the spotlight might be shifted away from Arizona.

“If we’re not the lone wolf out there and other states are doing this, the feds are going to have to act,” he said. “It should not lie in individual states or individual municipalities to try to enforce immigration laws. We need a comprehensive federal reform package.”

At the Greater Phoenix Convention & Visitors Bureau, Doug MacKenzie, director of communications, said it was “misguided to bring the tourism industry into the crosshairs of this political issue.”

The CVB, which is trying to dissuade groups from considering boycotts, stated that “we may never know the full impact that all the publicity surrounding the passage” of SB 1070 will have on decisions by visitors and organizations choosing convention sites.

Michael Stawiarski, president of the Arizona Sunbelt Chapter of Meeting Professionals International, released a statement from the organization’s national president, Bruce MacMillan, blasting the boycotts: “Using travel boycotts as a political weapon in Arizona (or anywhere) only hurts the local communities and the 200,000 workers in the state that benefit from the meeting and event industry.”

gpec.org | azhla.com | aila.org | azcommerce.com | treoaz.org | azhcc.com | visitphoenix.com | tucsonchamber.org

Arizona Business Magazine June 2010

At First Fridays, thousands of residents and visitors gather - AZ Business Magazine June 2010

Downtown Art Walk Is A Homegrown Success

If you’ve ever been to the Downtown Phoenix area on the first Friday night of the month, you most likely noticed that the streets were alive with people. At First Fridays, thousands of residents and visitors gather to tour more than 70 galleries, venues and art-related shops in what has become one of the largest, free, self-guided art walks in the country.

The event has come a long way since its humble beginnings in 1994, when it was “an informal, self-guided tour of art spaces Downtown,” says Greg Esser, a key player in the Artlink First Fridays program. Today, the events attract more than 15,000 people to the Downtown area each month.

Esser credits the Greater Phoenix Convention and Visitors Bureau (GPCVB) in part for the growth and success of First Fridays.

“The GPCVB has been a critical partner in making sure this success doesn’t remain a ‘best kept secret,’” he says. “ The efforts of the GPCVB have expanded the word-of-mouth phenomenon that started First Fridays, into national coverage and recognition for the event that now attracts visitors from well beyond the state line.”

Doug MacKenzie, director of communications for the GPCVB, calls First Fridays the perfect way to showcase “Downtown at dark,” as well as the talented artisans and vibrant art culture that exists and thrives in the area. He adds that First Fridays is just one of the “various segments that weave a pattern of hospitality and uniqueness” throughout the Downtown Phoenix area.

Beyond simply bringing people together on a Friday night to enjoy tours of local art galleries and museums, Esser believes, “The arts have been both a catalyst and a beneficiary of the growth and development of Downtown. Audiences have attracted new development and new development has attracted more audiences.”

Specifically, he notes Arizona State University’s new presence in Downtown and the development of the light rail as helping to give First Fridays events new life.

“The presence of ASU Downtown has infused new vitality, participation and programming on the part of students, staff and faculty,” he says. “Light rail has created a widely popular way to experience First Fridays without the challenges of parking Downtown.”

Despite the event’s success in attracting more and more people each year, it has not been immune to the state’s current economic troubles.

“The recent decline in consumer spending has created a significant strain on many of the businesses, artists and cultural organizations that are vital to Downtown,” Esser admits. “We have unfortunately lost a handful of businesses.”

This recognition of the harsh realities of the economic upheaval prompts Esser, who is now director of civic art for the Los Angeles County Arts Commission, to send Valley residents a message.

“Now more than ever it is important to spend locally and support those who have committed all of their energy and resources into creating a more vibrant community Downtown,” he says.

He anticipates First Fridays attendance will continue to expand over the next five years from its current monthly status of 15,000 visitors.

“I hope to see that number continue to grow to where (we) attract 100,000 visitors that support the rich fabric of Downtown neighborhoods, including Roosevelt Row, Grand Avenue, Garfield, the Warehouse District, Melrose, Coronado, the Museum District and the newly emerging CityScape and East McDowell Arts District — 10,000 visitors in 10 Downtown neighborhoods,” Esser says.

MacKenzie echoes those sentiments and notes that the GPCVB’s marketing efforts highlight all the services in the Downtown Phoenix area, as well as unique events such as First Fridays. He believes that despite the economic challenges, Downtown Phoenix is starting to become a “destination Downtown” in which people come to check out an event and then stay at one of the new or revamped hotels in the area.

“There is a glimmer of hope,” MacKenzie says. “We just need the spirit to move forward.”

Quick Facts

First Fridays

First Fridays runs all year from 6-10 p.m.

Free event shuttles run throughout the tour route, so you can get on/off wherever you choose.
The shuttles initiate at the Phoenix Art Museum, First Fridays’ headquarters.
Free parking is available at the museum, as well.

While local artists are highlighted, you can also check out pieces from national and international artists.

Arizona Business Magazine June 2010

GPEC Profile: Mike Tully, President And CEO Of AAA Arizona

Mike Tully
President and CEO, AAA Arizona

As president and CEO of AAA Arizona, Mike Tully has a keen interest in getting the state back on the road to prosperity. That probably explains why for the past seven years Tully, who joined AAA Arizona in 1998 as chief financial officer, has been a member of the Greater Phoenix Economic Council’s Finance Committee.

“GPEC’s role in our community is critical,” Tully says. “Attracting high-quality jobs to our state improves our health and economic performance, and makes the state a more attractive place for residents, as well as people moving to our beautiful state. As a membership organization representing nearly 800,000 people, AAA has a vested interest in the livelihood of Arizona.”

In addition to Tully’s position on the Finance Committee, AAA Arizona has a representative on the GPEC board of directors. That’s just part of the relationship.

“From a business perspective, we have used GPEC as a resource when we evaluated expansion opportunities, moving a large portion of our California operations to Arizona,” Tully says. “GPEC was invaluable in our ultimate decision, which resulted in nearly 800 new jobs being brought to our state.”
GPEC’s mission to create a competitive, vibrant, diverse and self-sustaining regional economy is critical to all of Arizona’s industries, Tully says.

“Ensuring that Arizona continues to improve the diversity of high-paying quality jobs is more obvious than ever, as seen by our recent recession,” he says. “Our precipitous decline as the No. 1 job growth state to No. 50 is symptomatic of our lack of industry diversity.”

Tully has been instrumental in driving the tremendous growth of AAA over the past decade, including expansion of its membership, financial services, insurance and travel operations. Prior to joining AAA, Tully owned an export finance company that arranged structured trade finance transactions for exporters throughout the United States.

The AAA executive has deep Arizona roots, having earned his Bachelor of Science degree in finance in 1987, and a master’s in business administration in 1991, both from Arizona State University. In 2007, he graduated from the advanced management program at Harvard Business School. Tully also holds a CPA certification.

As for travel trends in Arizona, Tully says the future remains murky.

“Our short-term forecast is flat, although shorter trips and drive trips continue to be popular,” he says. “While business travel is picking up in many areas of the country, it has yet to rebound in the Southwest.”

Likewise, international travel to Arizona continues to be weak, which hurts even more because international travelers generally spend four to five times the amount of money as domestic visitors.

www.aaaaz.com

Arizona Business Magazine

February 2010

Q&A With Michael Bidwell, Chairman Of GPEC, President Of The Arizona Cardinals

Michael Bidwill
Chairman, GPEC
President, Arizona Cardinals

Why did you opt for a second term as GPEC chairman?

It is an honor to serve a second year as chairman of GPEC. The organization is doing meaningful work, and I wanted to help build upon that work. I think it’s also important to provide consistency in leadership, particularly during times like this. Over the last year, GPEC has made impactful contributions to Arizona’s economy, including our work on the renewable energy incentive program (SB1403). We have much more to do and serving another year as chairman will allow me to continue to work closely with the governor, Legislature and business community on vital economic development issues.

You have been GPEC’s chairman during one of the worst economic downturns the Valley has seen in decades. What lessons have you taken from this experience and what have you learned about the business community?
Our state was unprepared for the slowdown in the economy and the ramifications are going to be sobering in 2010 for those not following the state budget cuts. It is clear that the business community needs to lead the effort to diversify our industry base. And it is equally clear that we have many talented, passionate business community members who are ready to step forward and provide new leadership. Like in football, we need a game plan and players on the field to execute it.

Economists say the recession has made Arizona more affordable again, and thus more attractive to relocating companies. Do you agree with this assessment, and how is GPEC making sure the Valley maximizes its competitiveness?
I believe it is one factor, but not significant enough to be a game changer. Arizona needs to understand that we compete for business expansion and relocation with our Mountain West competitor states. Decision makers who decide where these projects (and jobs) are located factor many things: an educated work force, cost of and access to capital, business operating environment and an ability to attract and retain talent. Housing costs play a role, but our competition has a leg up on Arizona in many of the other areas. We need to stress to our elected officials that we need a game plan to recover from this downturn and diversify our economic base.

GPEC has targeted the renewable energy industry as a source of new business opportunities. How do Arizona’s efforts to attract green companies compare with those of other states? How would you assess any progress the state has made?

With the passage of SB1403 last session, we are well positioned to land new solar and renewable energy companies. But Corporate America is going green too and looking for green or LEED-certified buildings. Arizona needs to develop new programs to bring our commercial buildings to LEED certification. There is no doubt this will help in our effort to land new projects.

What are some of the goals and initiatives GPEC is taking on this year and how will it go about achieving those goals?

We have several efforts. First, we are providing analysis to the Legislature on how rewriting the state’s Enterprise Zone legislation will stimulate job creation and fill some of the empty commercial space. Second, we have renewed our focus on marketing Greater Phoenix with an emphasis on positive business news and opportunity. We’ve created a new Web site called opportunitygreaterphoenix.com that showcases the region and unique opportunities businesses and people have here. Next, we are organizing executive missions to Washington, D.C., and New York, where we’ll meet with leaders who can help influence positive economic activity for Arizona. And of course, we’ll continue to work hard to bring solar and renewable energy companies to Arizona under the new incentive legislation passed last summer. It will be a busy year and we are committed to doing all we can to improve the Valley’s economy and bring jobs to this region.

www.azcardinals.com


Arizona Business Magazine

February 2010

Q&A With Debbie Johnson, Executive Director Of The Arizona Tourism Alliance

Debbie Johnson
Executive Director, Arizona Tourism Alliance

Debbie Johnson, executive director of the Arizona Tourism Alliance, is a major force in the Valley and state’s tourism and hospitality industry. She also serves as president and CEO of the Arizona Hotel & Lodging Association and the Valley Hotel and Resort Association. Johnson also represents the tourism industry by serving with the following organizations: American Hotel & Lodging Association; Arizona Film and Television Commission; the Governor’s Tourism Advisory Council; International Society of Hotel Association Executives; Arizona Sports & Tourism Authority; Civic Plaza Task Force; and the Phoenix Tourism and Hospitality Advisory Board. In 2003, she was named the Arizona Tourism Champion of the Year at the Arizona Governor’s Conference on Tourism, and in 2006, she was given the Phoenix Visitor Industry Champion Award by the Greater Phoenix Convention & Visitors Bureau.

How badly did the recession affect the state’s tourism and hospitality industry, and could it have been worse?
The tourism industry was particularly hard hit in 2009 by several factors, including the recession, the negative perception of travel and meetings, the fear of the H1N1 virus, and some misplaced political rhetoric. While our industry suffered unprecedented occupancy and revenue losses, I’m sure it could have been worse, although I shudder to think of what that would have meant to so many of our residents who rely on tourism for their livelihoods.
What we learned this year was the importance of the meetings industry to our state. Group and business travel accounts for more than 70 percent of revenue for most of our larger properties, and when we saw mass cancellations in that market due to fear of negative media coverage and public perceptions, it resulted in tens of millions of dollars missing from our state, city and county budgets. We’re still feeling those effects today as the Legislature grapples with how to deal with the deficit because of less than expected tax revenues.

What do you foresee for 2010?
We’re hearing mixed messaging as far as what the tourism industry can expect in 2010. While we anticipate having another challenging year, we are optimistic that the worst is behind us, and feel that we’ll make some inroads toward recovery.

What initiatives is the Arizona Tourism Alliance taking to help strengthen the state’s tourism and hospitality industry?

The Arizona Tourism Alliance’s most important roles are to advocate, educate and unite our industry. Bringing the industry together through annual events and monthly updates is key to keeping our members engaged and informed, and educating elected officials on the value of tourism revenues is an ongoing process that requires constant attention. With the current crisis that our state budget is in, tourism’s return on investment ($8 returned to the state budget for every $1 spent on tourism marketing) provides a positive and short-term solution toward lowering our deficit; so it’s critical for us to provide that positive message.

You are involved with several other tourism and hospitality organizations here in the Valley. How have all of those groups been working together to ride out the recession and prepare for recovery?

The Arizona Tourism Alliance, Arizona Hotel & Lodging Association, Valley Hotel & Resort Association and Southern Arizona Lodging and Resort Association have always been strong partners, but 2009 was the year that truly brought our industry and all of our advocacy organizations together. With all challenges come opportunities, and the bright spot of 2009 was that it united our members in the resolve that we’re all in this together. We have emerged from this crisis as a stronger and more resilient industry. And the theory that a vibrant Arizona tourism industry equals a healthy Arizona economy is undeniable.

www.aztourismalliance.org | www.vhra.net | www.azhla.com


Arizona Business Magazine

February 2010

GPEC Launches A New Website To Promote The Greater Phoenix Story

At a time when traditional newspapers are struggling or even vanishing, the Greater Phoenix Economic Council has launched a new Web site designed to provide information that offers a complete picture of what is going on in the Valley.

One of the goals behind the formation of OGP — opportunitygreaterphoenix.com — is to offset some of the negative news coverage that continues to plague Arizona. Barry Broome, GPEC president and CEO, says community leaders agreed on the concept of establishing a communications initiative that focuses on the brand of the Greater Phoenix market.

“We’re more transactional,” Broome says. “A lot of great attributes about our market don’t necessarily get conveyed in a transactional exchange. Our reputation is tied to a lot of things that go well beyond building work force availability and the cost of a transaction.”

Working with the Maricopa Partnership of Art, the Greater Phoenix Chamber of Commerce, and the Phoenix Convention & Visitors Bureau, GPEC maintains the Web site that enables people in Arizona and elsewhere to read stories about Arizona they might not see anywhere else.

“You can find the kind of in-depth stories not necessarily always available in a typical news environment,” Broome says. “Hopefully, it will become a social media phenomenon. Our goal is to complement blog activity and news activity in the market, and really tell our story. It’s more of a communications initiative than a Web site.”

Events of the past two years spurred the creation of Opportunity Greater Phoenix. There was concern that mainstream media were not defining Greater Phoenix in a fair and equitable way. Those events Broome mentions include the immigration debate, the housing market collapse, the impact on Arizona from the banking crisis and issues related to a state budget bleeding red ink.

GPEC Chairman Michael Bidwill and Vice Chair William Pepicello obtained funds from the private sector to launch the site. A Web publisher and a part-time reporter were brought onboard. Discussions about OGP began Oct. 1. Eight weeks later, the site was up and running.

The OGP site is designed to inform and influence the conversation about all things related to business, employment, and the economy in Greater Phoenix. It provides accurate coverage of news, trends and analysis relevant to the local economy, along with resources such as database searches, lists, links and summaries on work force, quality of life, and overall competitiveness. It will be particularly helpful, Broome says, when GPEC embarks on economic development trips to New York City and Washington, D.C. Interested parties can go to a single site and get a broad base of stories about the Greater Phoenix market, he says.

Commenting on the emergence of blogs, Broome says, “There’s not a lot of peer review to a blog. As communications becomes more organic and viral, we think it’s important that the market has an organic and viral communication device that will allow readers who are intrigued about our market an intense reading and learning experience.”

So where and how will the site get its information?

“We will be reconstituting information from mainstream media, and producing a lot of fresh new stories of our own,” Broome says. “We expect to write at least five new major stories a week. We’ll have features on CEOs, a community news site, profiles on individuals, and there may be an interactive opportunity to interface with an expert on the economy. The content will be fresh and compelling, but it won’t all be originally generated.”

As an example, Broome notes that Nobel Prize winner Lee Hartwell left the Fred Hutchinson Cancer Research Center in Seattle, where he was executive director, to establish and co-direct the Center for Sustainable Health at Arizona State University’s Biodesign Institute.

“That’s a big deal,” Broome says. “There’s a lot more to that story. What will be the focus of his research? It’s important to the region’s reputation that the story gets told in a more comprehensive and robust way.”

Another example of a story waiting to be told involves a dynamic young woman who graduated from ASU and launched a wireless company in Chandler.She might not be a candidate for a major news story by a major news outlet, but she’s young, which addresses the notion that Greater Phoenix is a retirement community, and she’s talented, which more accurately describes ASU as a first-class institution and not a party school, Broome says.

“That story won’t be in the New York Times,” he adds. “They write about our housing troubles. And The Washington Post writes about our budget problems.”

Opportunity Greater Phoenix is more than a news source. OGP is a resource, Broome says.

“Businesses looking to relocate or expand into Greater Phoenix will find information about the work force, quality of life, policies and legislation that impact decisions,” he says. “And those looking to visit or live in the Valley will find useful information on employment, neighborhoods and arts and culture.”

opportunitygreaterphoenix.com


Arizona Business Magazine

February 2010

money in vice

The Economic Recovery Begins In 2009, But It Will Be Slow Going

The national and state economies are expected to start feeling the effects of a recovery during the last quarter of 2009. However, the recovery over the next year will be slow, with unemployment continuing to rise and economic growth anemic at best. Meanwhile, the state’s expenditures are rising, even as revenue continues to fall, setting the stage for future budget cuts and an expected tax increase.

That was the consensus forecast unveiled by top economic experts from the W.P. Carey School of Business at Arizona State University and the Arizona governor’s office at the annual Economic Outlook Luncheon on May 20. Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at W.P. Carey and editor of Economy@W.P. Carey, provided an overview of current economic conditions on the state and national level, and offered a forecast for the coming year.
“The economy is going to show some signs of recovery in the last part of 2009, but the way I like to look at this is that lots of our economic indicators will still be underwater in a sense — they just won’t be as far underwater,” he said. “We’ll probably see positive growth in GDP, we will see job losses getting smaller, but there will still be job losses. There will still be people claiming unemployment insurance and, of course, unemployment rates will still be going up.
“It’s going to be a deep, sort of U-shaped recovery and 2011 will probably be a pretty good year of job growth,” McPheters added. 
In the meantime, job losses will continue to mount. In March, with an over-the-year employment decline of 7.1 percent and 136,000 jobs lost, the Valley just edged out Detroit as the weakest large metro labor market in the nation. And even as the economy begins to recover, the Greater Phoenix area will still see its labor market contract by 1 percent in 2010, according to McPheters.
Nationally, McPheters stressed that while the current recession has been painful, it still is not on par with the Great Depression. The Great Depression was marked by four consecutive years of decreases in Gross Domestic Product (GDP), while the current recession is expected to result in four consecutive quarters of decrease in inflation-adjusted GDP. In fact, in the first year of the recession, the national GDP actually increased by 1.1 percent.
“During 2008, the first year of the recession, you would expect that the GDP would be decreasing,” he said. “Well, one of the factors holding it up was exports. Exports continued strong in the United States through 2008.”
This year, however, exports are expected to drop by 10 percent. That’s just one example of how the national and state economies will continue to struggle as the recovery begins to take hold. Another example is the expected freefall in the commercial real estate market, especially in Arizona.
“Commercial is the next shoe to drop and we have seen this pattern before,” McPheters said. “Even as you see residential (construction) begin to pick up, I think you can expect that commercial building is going to be very, very weak all the way through 2010 and probably 2011, because what we need to see is population growth come back and job growth to come back. There’s no point in building retail space and office space if the jobs are not there and the consumer is not coming out to shop.”
And it is consumers, who account for 71 percent of GDP, who really hold the key to the economic recovery.
“The consumer is the only part of this economy that can bring us back,” McPheters said. “Consumers are not going to come back into the game until home prices stop falling, until the stock market stabilizes, until they see unemployment rates have peaked out and job losses start to get smaller and smaller. And the consumer has to have confidence to buy, and believe it or not, the consumer has to back off of their inclination to save their money.”
In March, the savings rate as a percent of disposable income was 4.2 percent, up from 2.6 percent six months earlier. While increased savings are considered a good thing in robust economic times, a pullback by consumers as an economy tanks can have devastating effects. McPheters pointed out that for each 1 percent increase in the savings rate, approximately $100 billion are being pulled out of the consumer-spending stream.
However, McPheters expressed confidence that the very calamity that sent our state and national economies reeling will eventually add to Arizona’s attractiveness to new residents and businesses — falling home prices.
“Housing prices have now returned to the traditional level, where Arizona housing prices are now more affordable than the national average,” he said. “In 2005 and 2006, we had come to the point where we were one of the least affordable markets. That has turned around and it has turned around very quickly. Of course that has been very painful.”

Dennis Hoffman, director of the L. William Seidman Research Institute at W.P. Carey, agreed with McPheters, adding that he believes the state’s economic rebound will be strong.

“This of course is the big question: What kind of bounce will take place? Now, I’ll have to say that the dramatic shakeout in prices in housing, while it has been absolutely disastrous for a number of folk and put a lot of pressure in a lot of different places, it might set us up for a more robust recovery than I would have thought six to nine months ago,” he said. “The thinking is really, very, very simple; an attractive attribute of Arizona has historically been great climate, affordable housing and a place to get a job. That third aspect really doesn’t exist right now, but it could exist if our economy recovers at a little faster pace.”
In the economic downturns of the past four decades, Arizona has bounced back strongly, and Hoffman is confident history will repeat itself, especially if the state and Valley can re-create the environments that people from around the country have found so attractive.

However, a major wrench in making the state attractive again is Arizona’s current budget crunch. In fiscal year 2009, the state’s budget gap stands at $1.6 billion. In fiscal year 2010, that’s expected to almost double to $3 billion dollars. As the economy has worsened, unemployment has soared to almost 8 percent, foreclosures have skyrocketed and businesses have closed their doors. As a result, billions of dollars in revenue from income, property, sales and business taxes have evaporated. Conversely the need for state services has exploded.

“We’re really seeing the effects of the downturn in the economy, both in terms of state revenues — our collections are down at a very significant rate — and likewise, our caseloads are up at a very significant rate, because more of our citizens are in need of services,” said Eileen Klein, director of the Arizona Governor’s Office of Strategic Planning and Budgeting, adding that in the past two months alone the Arizona Health Care Cost Containment System (AHCCCS) has enrolled 50,000 people.
Hoffman pointed out that in the past, $48 to $50 out of every $1,000 of personal income had gone into the state’s general fund.

Wooing businesses to AZ in the recession

Despite Tough Times, Economic Development Groups Continue To Woo New Businesses To Arizona

Economic development experts in Arizona hope to parlay the state’s convenient geographic location, and even a stagnant housing market, into attracting new businesses.

Toss in relatively low taxes, a freeze on new regulations and a well-honed reputation as a business-friendly state, and recruiters have a tool box full of reasons why businesses should consider relocating to Arizona.

But that’s not all the economic development agencies tout. Local experts know that businesses looking to relocate are interested in those intangible quality-of-life issues: an available and educated work force, a higher-education community that excels in research and churns out highly qualified workers, and a relatively low cost for starting up and doing business.

Television commercials are generally cost-prohibitive, officials say, leading them to rely heavily on the Internet for their recruitment efforts. Feature articles in national trade publications also represent a low-cost way of spreading the Arizona story.

Two of Arizona’s largest economic development agencies — the Greater Phoenix Economic Council (GPEC) and Tucson Regional Economic Opportunities (TREO) — are collaborating on a campaign to lure California businesses to Arizona.

Scarlett Spring, GPEC’s senior vice president of business development, says her team makes targeted trips to California at least once a month, with specific emphasis on the Bay Area, Los Angeles and San Diego. Often, GPEC invites local mayors along to give recruitment efforts an official flavor. Bringing mayors, Spring says, gives recruiters leverage and “opens doors that might not otherwise be open.”

The GPEC message to California?

“Arizona has a business-friendly environment and a reputation of having lowered taxes in some shape or form for 10 consecutive years,” Spring says. “It’s a lower-cost environment for their employees, whether through workers’ comp, competitive wages or health care insurance. Those are the operational costs that a company looks at when considering a financial move or expansion.”

Noting that virtually every phase of running a business is more expensive in California, Spring adds, “What we’re doing is trying to position Arizona as being complementary to the California marketplace.”

DGPEC also invites businesses to Arizona for special events. For example, last November biotech and solar companies from the Bay Area were hosted for a weekend in the Valley. The visit included attending a game between the Arizona Cardinals and the San Francisco 49ers. Two of those companies are close to moving to Arizona, Spring says.

Laura Shaw, senior vice president of marketing for TREO, agrees with the strategy of taking advantage of Arizona’s location. California businesses struggling under mounting operating costs have the ability to move to Arizona and still access California markets.

TREO targets such industries as aerospace, defense, biosciences and alternative energy, and only meets with companies that have been pre-qualified as likely candidates for relocation.

“Research shows that labor drives all market decisions — whether a company can find the labor that fills their needs,” Shaw says. “We focus on matching our assets with a company’s needs.”

Despite the national perception that Tucson is a low-wage community, TREO presses for higher-paying jobs.

What the Tucson area offers is a high-growth Southwestern region situated at the doorstep of California and Mexico, with young talent graduating from the University of Arizona. Tucson is also in the heart of one of the most heavily traveled trucking networks, linking Mexican markets to the California coast.

Meanwhile, the Arizona Department of Commerce, though on a limited basis because of budget cuts, continues to participate in trade shows and foreign direct investment events in Canada, Mexico and Europe. Commerce officials and hired contractors work with foreign companies that are interested in expanding to Arizona. They also help match Arizona firms with foreign customers.

Kent Ennis, interim director of the Commerce Department, confirms that a tight budget makes recruiting more difficult, yet the agency reaches out to major industries, including bioscience and solar. In fact, the Commerce Department led an Arizona delegation to a national convention of bioscience technology companies in Atlanta on May 18.

In addition, the Commerce Department assisted in the relocation of Spain’s Albiasa Solar, which in April announced plans to build a $1 billion renewable solar energy plant near Kingman. The project will create 2,000 construction jobs and more than 100 permanent positions when it is completed in 2013, Ennis says.

The Arizona Association of Economic Development, which is more of a trade organization representing Arizona firms and does not embark on recruiting efforts, nevertheless gets its share of contacts from businesses considering a move to Arizona, says Bruce Coomer, executive director of AAED. But first, he makes sure to sing Arizona’s praises. He mentions the usual advantages, but adds an unlikely twist.

Because our housing market crashed,” he says, “that’s a plus. Now there is affordable housing if a company wants to move here, especially from California. Their employees can really get some bargains.”

Phoenix_skyline_Arizona_USA

A Voyage Of Discovery In Phoenix

Facing a down economy, shrinking budgets and significant pressures to outperform the year’s commitments, how do you find time for sustainability? Let’s face it, if there is no payback within the current year, it’s unlikely you can get capital or modify your operating budget to make any kind of significant difference toward a green program, right? Wrong!

In a recessionary environment there’s more than one way to cut costs and leverage those savings to support other initiatives. In addition to pure cost savings, a little bit of planning and adjustment of current policies can yield results with little or no additional expense.

Our approach at the Greater Phoenix Chapter of IFMA, beginning in August 2008, was to establish a Facility Managers’ Green Peer Group (FMGPG) to foster open information exchange and provide a forum for sharing best practices.

What FMGPG has done is to create the environment for the peer group to be successful. A facilitator who is familiar with the subject matter is the primary pivot point; we manage and develop the agenda, secure the location and communicate through the FMGPG to the group members. The facilitator then leads the meeting and keeps the group focused on the agenda and future goals.

The initial goal of the peer group was to educate the members on the five major categories of LEED (Leadership in Energy and Environmental Design) as they related to the Existing Building Operations and Maintenance structure, or EBOM.

The LEED-EB system focuses on building maintenance and operations. Unlike the other LEED standards, points are awarded for established programs and policies with measured results over time. Metrics are taken during a performance period lasting from three to 12 months.

As with the LEED for new construction products, points are awarded in six categories: sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor air quality, and innovation in operations

There are 92 available points, with a minimum of 34 required for the lowest level of certification. Most organizations nationwide appear to be striving for Silver or Gold certification based on the initial condition of the building.

We established a yearlong program that was based on the following formula:
General Discussion and Checklist Review + Facility Examples and Benchmarking + Site Visit = A Solid Foundation of Understanding.

So, what’s the bottom line on the benefits of the peer group:

  • Approaching sustainability concepts with minimal or no impact to your FM resources and budget.
  • Marketing your FM organization through sustainability involvement.
  • Taking advantage of LEED benefits without certifying your site.
  • Decoding the myths and fears of LEED.
  • Strengthening your FM position by demonstrating sustainability initiatives.
  • Demonstrating the hidden value of your FM organization by introducing and achieving sustainable initiatives.
  • Educating your staff, customers and stakeholders, as well as yourself, on sustainability and the workplace.
  • One LEED case study, managed by an IFMA CFM (Certified Facility Manager), has shown the following validated results:

    • Effectively reduced electricity use by 35 percent.
    • Effectively reduced natural gas use by 41 percent.
    • Reduced domestic water use by 22 percent.
    • Reduced landscape water use by 76 percent.
    • Diverted up to 85 percent of its solid waste.
    • Reduced total pollution by 26 percent.
    • Reduced CO2 emissions by 17 percent.

    A new study by CoStar Group, the commercial equivalent of MLS, has found that sustainable “green” buildings outperform their peer, non-green assets in key areas such as occupancy, sale price and rental rates, sometimes by wide margins.

    The results indicate a broader demand by property investors and tenants for buildings that have earned either LEED certification or the Energy Star label, and strengthen the “business case” for green buildings, which proponents have increasingly cast as financially sound investments.

    According to the study, LEED buildings command rent premiums of $11.24 per square foot over their non-LEED peers, and have 3.8 percent higher occupancy. Rental rates in Energy Star buildings represent a $2.38 per square foot premium over comparable non-Energy Star buildings, and have 3.6 percent higher occupancy. And, in a trend that could signal greater attention from institutional investors and the C-level, Energy Star buildings are selling for an average of $61 per square foot more than their peers, while LEED buildings command a remarkable $171 more per square foot.

    At the end of the day — even in a down economy — you can make a difference, even with little or no budget.

    Michael Bidwill Arizona Cardinals

    Q&A: Michael Bidwill, President, Arizona Cardinals

    During these difficult economic times, how vital is an organization such as the Greater Phoenix Economic Council (GPEC) to the local economy?
    GPEC is vitally important because it is the only regional organization focused exclusively on bringing new business to Greater Phoenix. Because GPEC works closely with companies considering expansion to the region, they know what companies need to make business decisions and gain insight into what steps the state can take to better compete with our Mountain West competitor states.

    What can the Valley do to better position itself to succeed once the recession is over?
    Diversify our economy and work with public sector leaders to create sensible, new programs that bring high-wage industries to Arizona. During the last decade of the real estate explosion, Arizona was one of the leading job-producing states. Over the last two years, we have fallen to 49th in terms of new job creation. Business as usual will not work. Now is the time to change our metrics and compete for other industries to migrate to Arizona.

    Arizona and Greater Phoenix routinely lose projects to less desirable locations because of aggressive relocation programs in other states. GPEC has developed modest, fiscally responsible programs, such as the Quality Jobs Through Renewable Industries program, for the Arizona Legislature to consider. GPEC has vetted these programs with decision-makers in the renewable energy industry. Senior executives within these industries have told us this program would put Arizona in a more competitive position to win projects. GPEC also had Elliott D. Pollack and Company conduct a third-party review of our program to confirm its fiscal impact.

    We need to immediately work with the state to develop and implement new programs that make our region more competitive.

    What are some of the initiatives and goals you have planned this year for GPEC, and how will you go about achieving those goals?
    In addition to solar and renewable energy, GPEC has three other strategies that we feel are meaningful generators of new business. We continue to work aggressively on a foreign direct investment program, as the United States is still an attractive environment to invest in for international companies. Next, in working with many of our public sector leaders, we are actively seeking to locate companies to Greater Phoenix from neighboring states with higher operating costs of doing business. Lastly, health care in Arizona is an untapped resource. In fact, Arizonans routinely seek health care outside of the state valued at hundreds of millions of dollars. We need to work with the health care industry to determine the needs not currently being met in Arizona and look to those opportunities for economic growth.

    How did you first become involved in GPEC and how have your own professional experiences prepared you for your current role?
    The Arizona Cardinals have long been stakeholders of GPEC, as we believed in its important work. I had no personal involvement until Glendale Mayor Elaine Scruggs asked me to serve on the GPEC board three years ago. I was honored to join and realized quickly how critical this organization is to helping our local economy grow, especially during this downturn and with the state’s budget cuts to the Arizona Department of Commerce.

    You’ve seen first hand how important professional sports are to the local and regional economy. How can the Valley capitalize more on that in the future?
    Sports are important to Arizona and we need to support what we have now. But, again, we need to focus on diversifying our economy. Like a personal stock portfolio, we cannot become “over-weighted” in any single sector. We have all the teams we need, but it will be important to attract events with significant economic impacts and exposure like the Super Bowl in the future. Our regional success will depend largely on creating a diverse and vibrant economy around many new industries and we can’t look to real estate or sports to take us out of this downturn.

    Public Policy, AZ Business Magazine Oct/Nov 2006

    Greater Phoenix Chamber Of Commerce Outlines Its Most Pressing Public Policy Efforts

    Public Policy in Focus

    Greater Phoenix Chamber of Commerce outlines its most pressing public policy efforts

     

    Virtually any group that has experienced the give-and-take of supporting or opposing legislation at the state Capitol is aware of the truism—half a loaf is better than no loaf at all. Indeed, that’s how the Greater Phoenix Chamber of Commerce views the 2006 regular session of the Arizona Legislature. And for those who didn’t get everything they wanted, there’s always next year.

    Public Policy in FocusTodd Sanders, vice president of public affairs for the chamber, sees the organization’s public policy efforts as challenges, not necessarily hits or misses. One of the chamber’s biggest challenges, Sanders says, was and still is the issue of employer sanctions in connection with the growing problem of illegal immigration.

    “We believe employer sanctions are necessary,” he says. “But in drafting legislation, it was difficult to put something together that was tough, but fair to employers, something that businesses can implement. There is a federal requirement that we check IDs, but the way the bill was conceived, even if we do that and find someone who is illegal, we could still be subject to sanctions.”

    The Greater Phoenix Chamber and other stakeholders representing restaurants, homebuilders, small businesses, the Arizona Chamber of Commerce and Industry and other chambers of commerce worked with legislators trying to craft an acceptable bill. What was drafted was combined into an omnibus bill dealing with illegal immigration that Gov. Janet Napolitano vetoed.

    The chamber was silent on other parts of the bill, including border security, but Sanders says, “We were in favor of employer sanctions. It was drafted in such a way that it was tough, but our members could still implement it.”

    One of the biggest obstacles is that federal law requires employers to check IDs, including Social Security cards and driver’s licenses, but those are easily forged, Sanders says. “Business owners are trying to make money,” he says. “They’re not ID experts or document experts. It’s one of the issues we’ll be looking at in the next session. There is a misperception that we were against employer sanctions, which we were not.”

    Regarding border security—a hot topic in the general election—Sanders says, “We need to get this done at the federal level. Fixing it at the state level is very dicey at best.”

    Another issue and a top priority for the chamber was property tax cuts. “It was quite a process, a lot of give and take,” he says. “The governor wanted a rebate and we wanted a tax cut. We got the cut. Actually, it’s a suspension for three years, so we’ll probably want to go in again for a permanent elimination of that tax. It was our biggest win, given the valuation increases, to protect taxpayers from massive tax bills in the future.”

    Elimination of the property tax doesn’t affect the counties, because programs formerly financed by the tax will receive money from the state’s General Fund, Sanders says.

    He recalls the big push at the Legislature for eminent domain reform, which the governor vetoed, and the possibility of such an initiative getting on the November ballot. In her veto message, Napolitano has said the bill would have ended existing slum clearance and redevelopment areas and inappropriately restricted the ability of cities to deal with slums and urban blight. “As a chamber, we favor strong private property rights protection,” Sanders says. “We want to make sure it’s balanced. Protection is very important to us.”

    AZ Business Magazine October / November 2006The chamber chose not to weigh in on funding for all-day kindergarten and teachers’ raises. “We have supported all-day kindergarten, but with a full phase-in over time,” Sanders says. The chamber was active in efforts to establish and fund the 21st Century Fund. The money is to be used to build and strengthen medical, scientific and engineering research programs and infrastructure, with a non-profit corporation expected to provide matching funds. “We wanted $100 million, and they came in at $35 million,” Sanders says.

    Regarding a constitutional proposal to establish a state minimum wage of $5.95 an hour effective July 1, 2007, to be raised to $6.75 an hour on July 1, 2008, and thereafter adjusted for inflation each year, Sanders says, “It’s a safe bet we will be opposed to that measure. We generally oppose those mandates, when government mandates what to pay someone. It’s got a built-in yearly inflator, and that’s where the real pushback will come. In good times, like now, it’s different and maybe business could absorb it, but in bad times it becomes problematic.”

    www.phoenixchamber.com

    Arizona Business Magazine Oct/Nov 2006